Incentives to U.S. railroads could boost ag shipments, save millions for farmers

Boosting federal investment tax credits and accelerated depreciation schedules for railroads could mean millions of dollars annually in savings to the U.S. soybean industry, while helping to reduce trucking congestion on the nation’s highways, according to a new study for the United Soybean Board.

Adding other benefits, including savings on highway maintenance and construction, would amount to nearly $2.3 billion annually after five years, says the study funded by soy checkoff dollars and coordinated by the Soy Transportation Coalition.

“The U.S. soy industry needs a transportation system that runs smoothly in order to move our soybeans to markets — and railways are a major part of that,” says soybean farmer Jared Hagert, coordinator of the USB International Opportunities target area. “A big key to growing markets, both domestic and international, is being able to deliver our soybeans in an efficient manner.”

The report suggests that if rail infrastructure investments are adequate to support growth, there will be a gradual shift each year from truck transportation to rail, which uses about one-third of the fuel per ton mile as trucks, providing savings of fuel and money all along the transportation chain. The U.S. Department of Commerce has estimated that for each $1 billion in new rail investment, an additional 20,000 jobs are created.

Clogged roads expensive

The Urban Mobility Report by the Texas A&M Transportation Institute earlier this year noted that clogged roads cost the nation $121 billion in time and fuel in 2011. It is projected that in just the next seven years traffic congestion costs will increase by 65 percent, and hours of lost time by 55 percent if the status quo is maintained (and even status quo would not be a good bet given the fiscal hole the government has dug itself into).

A 2007 U.S. Department of Transportation study showed the breakdown of shipping the nation’s cereal grains and agricultural products at 49 percent for trucks, 23 percent for barges, and 30 percent for rail.

A significant influence on the use of trucks in recent years has been the hauling of corn to ethanol plants, the USB study points out. While corn for export is relying more heavily on rail, almost all the corn for ethanol is transported by trucks, now about 80 percent of domestic corn shipments.

Transportation issues for agriculture will be the focus of the first ever Agricultural Transportation Summit July 30-31 at Rosemont, Ill., bringing together leaders of agricultural producer organizations, agribusinesses, and government. It will be conducted jointly by the USDA, the Soy Transportation Coalition, and the National Grains and Feed Association (See conference info here: http://bit.ly/ZZTNVi).